Washington’s Homestead Exemption Only Applies to Property in Washington, Supreme Court Rules

In In re Wieber, 347 P.3d 41 (Wash. 2015) (en banc), the Washington Supreme Court was asked:  “Does the Washington homestead exemption law, RCW 6.13.010–.240 apply extra-territorially to real property located in other states?”  The U.S. Bankruptcy Court, W.D. Wash. certified the question to the Supreme Court after a chapter 13 debtor claimed a Washington homestead exemption in an Alaska property, and a creditor (represented by Riddell Williams) objected.  The Court answered in the negative—Washington’s homestead exemption only applies to real property located in Washington.

Washington’s statute defines a homestead as “real or personal property that the owner uses as a residence,” or that the owner intends to use as his or her principal home.  RCW 6.13.010(1).  The exemption protects up to $125,000 in equity in the homestead from attachment and execution by creditors.  RCW 6.13.070(1), .030; Wieber at 44.  In bankruptcy, individual debtors may chose between state and federal exemptions.  11 U.S.C. § 522(b)(2); Wieber at 42.  If the debtor choses state exemptions, the law of the state where the bankruptcy is filed applies.  Id.

A majority of courts have declined extraterritorial application of state homestead exemptions.  Id.  The minority of courts that have permitted extraterritorial application did so on policy grounds—i.e., the purpose of the exemption is to provide a home for the family, irrespective of state boundaries—or on principles of statutory construction, when the statutes contained no language restricting the exemption to state residents.  Id. at 42–43 (citations omitted).   Washington’s homestead exemption is silent on extraterritorial application—there is no language expressly prohibiting or supporting its application to property outside of Washington.  Id. at 44.  Nonetheless, given the greater context of chapter 6.13 RCW and Title 6, “Enforcement of Judgments,” the Wieber Court found ample support for a statutory construction limiting the exemption to real property in Washington.

The Court examined the “procedural” aspects of chapter 6.13 RCW, noting that these procedures plainly apply to Washington courts and agencies to control how the exemption is claimed, limited, and attacked, and “a consistent reading would also require the same actions to be taken by out-of-state courts and agencies” if the homestead exemption applied out-of-state.  Id. at 44.  The Court found it unlikely that the state legislature meant to impose procedural requirements on foreign courts or agencies, which the state would have no power to enforce, but which could not simply be “jettisoned” from the statute.  Id.  And, placing the exemption in greater statutory context, Title 6, “Enforcement of  Judgments,” expressly applies to “the superior courts and district courts of this state.”  Wieber at 45 (emphasis in original) (citation and internal quotations omitted).  The statutory procedures cannot be applied extraterritorially, yet it would be “inconsistent with the comprehensive legislative scheme to apply some but not all portions of the homestead law extraterritorially.”  Id.

Finally, the Court observed that the significant variation among homestead exemption statutes—with some states providing an unlimited exemption, others allowing none at all, and many gradations in between—further suggests that the legislature intended Washington’s unique homestead exemption to apply in Washington only.  Id. at 46.

Author:  Hilary Mohr